Non Fungible Tokens (NFTs) are digital assets in different shapes and sizes including art, image, GIFs, music, video game items, collectibles, memes, virtual fashion, and more. Today’s time is watching the craze of trading such digital assets and people are earning a lot of money. NFTs are a method for creators to save down their works, which are safe from piracy and safe to share, and also give a guarantee of getting paid.
But as the Non Fungible Tokens (NFTs) trading has grown exponentially in the last few years. And due to this, the money in the NFT trading has also become big. Nowadays, some NFTs are being sold for millions of dollars. All of this has caught the eyes of scammers too. As many people are on this marketplace, and not everyone is an expert, therefore, these scammers are also making their place on the internet.
What is an NFT Scam?
Scams are a method of making money in the wrong methods. People who are searching for some items in the market get into the trap of fake sellers or so-called scammers. Those people sometimes lose a big amount of money and this is called a scam. NFT has grown into a big market and has great traffic of new buyers. And these things automatically attract scammers to this market. And people can lose money here too.
Common Types of NFT scams
As the popularity of NFTs is increasing, the market is growing. This growth has led scammers to find various methods to trap and scam the people. Below, we have shared the top 5 NFT scams with you.
Rug Pull Scams
A rug pull scam is a method of backing out after the hype is created. When a developer or promoter of a project or NFT creates a big hype about the items on social media and in the market. And when the investors have invested a lot in it, the prices are at high grounds, the promoter starts to back out, and this causes a massive drop in prices in the market. The scammers take all their investors’ money, and investors have to see a big loss. Similarly, the developers block the selling channels of the NFTs by adding a code to them, which causes a lot of loss to the purchasers.
Phishing is an old method of scamming people. In phishing, the scammers show very attractive and mouth-watering promotions and offers, and then smartly take confidential details from people. Similarly, in NFT Scams, scammers create attractive websites with fake details, phony advertisements, and eye-catching pop-ups. Through these fake websites, scammers ask for users’ private wallet details or confidential codes. As they get all these things, they are easily able to hack into the wallet and steal all your crypto and NFT collection stored in it.
When a buyer has bought some NFTs, he can resell the NFTs in a secondary market. When they have to sell NFT, they have to list their NFT for Sale in the market, so that buyers get the alert. After the whole process of selling and buying, the bidding may reach higher, but the bidders may switch the preferred currency decided for sale, with low-valued cryptocurrencies. Due to this, the seller may have to bear a heavy loss.
When an artist creates a valuable NFT, which has a good price in market. Some scammers try to create a fake copy of the artist’s work and then open a fake sale of that NFT in the marketplace. In the marketplace, these NFTs become available for auctions and buyers who do not have so much knowledge or who do not check the originality of the NFT, by such products, which have no real value in the market. And this causes a loss of the potential buyer.
Pump And Dumps
This scheme of scammers is also very old and people often get scammed with these tricks. As its name “Pump and Dump” refers to raising and dropping. Similarly, Scammers within a group create an artificial fake demand for NFTs in the market. Some unsuspecting and new buyers join the auctions, thinking that the NFTs have some great values. Buyers start to bid big and big, higher and higher, soon the prices reach a height, the scammers sell their NFTs, which have no such value in the market, to the buyers. Now buyers find out that there is no such value for these NFTs in the market and bears a potential loss.
NFT Scams that Made Many People Lost Money
Lana Rhoades NFT Scam
Lana Rhoades is a famous pornstar and an influencer. She had scammed her audience and went away with $1.5 million.
Lana Rhoades had started a NFT Project with the name of CryptoSis. She made the investors believe that the project is a “profitable project”. The project is going to feature cartoon images of Lana.
Lana had sold her project to the investors as a “valuable investment”, and never said that she is selling some artwork. She convinced her audience and investors, that she will turn this project’s growth to a massive scale, which will increase its value in the market, and they can sell the NFT with more profit.
Later these weeks, one day she just disappeared with $1.5 million worth Ethereum. And around 6000 people got scammed with rug pull method.
NFTs have made a big market in the world economy. They give a lot of services to the creators and at the same time give various easy methods of exchange and protection from piracy. But as a part of the tech and economic sectors, scammers are always active in such marketplaces. It’s not easy to wipe them out from the market.
But if a buyer becomes a little aware of the situations and scams, he can probably be safe from potential losses. So be aware of such scammers and do good research before buying such products. That’s it for today guys, hope you enjoyed the article and learned something new.